Recently, Blackstone made an $8 billion bid for Crown Resorts, and this has now attracted the gaze of Star Entertainment, one of Australia’s biggest casino operators.

A top shareholder at Star, John Ayoub, states that its company needs to use the uncertainty affecting Crown Resorts and make a profit. The best way for that is to join this potential Blackstone takeover. If not that, Star should enter the picture by operating the three Crown casinos through a joint venture we have already seen Blackstone use in Las Vegas.

Blackstone owns the Cosmopolitan Casino and properties near the Bellagio and MGM and leases them to the operator MGM. So, it’s clear that Blackstone has already done similar things in the past and would thus be interested in doing it again.

John Ayoub believes that any form of Crown-Star tie-up would be beneficial for the shareholders. The best-case scenario, according to him, is Star being the owner and operator of assets, while Blackstone the owner and beneficiary of property assets.

But what do the analysts say? They estimate that a merger of $8 billion valued Crown Resorts and $3.7 billion valued Star would bring $150 million annually. According to Ayoub, this translates to $1.5 billion in value for shareholders.

However, John Ayoub also believes that Star shouldn’t jump on the bandwagon immediately. It would be best for the current uncertainty to be resolved before any engagement starts. In other words, he would first like to see the current royal commissions into Crown Resorts’s Western Australia and Victoria licenses to end. He also wants the problem with the New South Wales license to end positively.

As for analysts and investors, most believe that Blackstone made a lowball offer with its $11.85 for a share. However, they are aware that this was likely done to get Star Entertainment to the negotiating table.

However, Star also has a great opportunity to create value for itself without making an independent bid for Crown Resorts. The possibility is high that Star would be making up to $110 million per year from running current Crown Resorts’ properties.

However, a deal with Star would also be very beneficial for Blackstone as well. Probity approval would likely take a whole year for the company, while the same would be done much faster with Star onboard as the operator, as it can already operate in Queensland and New South Wales.

Assuming Star considers this to be a good opportunity for the company, it’s important to state that this is likely the only way to get it. There’s a big possibility that Star cannot afford $8 billion or more to buy Crown Resorts on its own. If that weren’t enough, the biggest shareholder at Crown, James Packer, who owns 37% of the company, would likely want a cash payout for his shares.

All in all, everything points to Star joining in with Blackstone, but time will tell. Naturally, we’ll make sure to follow the story as it unfolds.